RX - Biosyent

[chmith]

Guys, just recently noticed this one.. v interesting company and potentially a good entry point. However, I find it a bit disturbing that there doesn't seem to be any disclosure around the revenue split by product, and also the agreements in place (term, margins..).

 

Elephant in the room would be Feramax... launched in 2007 or so, investor pres. mentions 8-10 year agreements as standard strategy, is that coming up for renegotiation, what is risk of worse terms/losing the product? Apologies if this info has been communicated but couldn't find it in PR / MD&A..

 

c

[snowball82]

Guys, just recently noticed this one.. v interesting company and potentially a good entry point. However, I find it a bit disturbing that there doesn't seem to be any disclosure around the revenue split by product, and also the agreements in place (term, margins..).

 

Elephant in the room would be Feramax... launched in 2007 or so, investor pres. mentions 8-10 year agreements as standard strategy, is that coming up for renegotiation, what is risk of worse terms/losing the product? Apologies if this info has been communicated but couldn't find it in PR / MD&A..

 

c

 

Yeah Chmith, they probably don't disclose margins for competitive raisons.

 

So about Feramax it's a different strategy as they own it. They could sell this product in more countries if they want.

 

[chmith]

 

Yeah Chmith, they probably don't disclose margins for competitive raisons.

 

So about Feramax it's a different strategy as they own it. They could sell this product in more countries if they want.

 

Thanks Snowball, that may very well be the case.. becomes difficult to value the business without some sort of breakdown and term of licenses though (plus visibility on potential for renewal) as the core of it should be the PV of profits from their current portfolio of drugs. I didn't realise that they own Feramax, that is clearly a massive plus. Do you have any view on the risk from the competing product referenced higher up in the thread?

 

 

[chmith]

 

Yeah Chmith, they probably don't disclose margins for competitive raisons.

 

So about Feramax it's a different strategy as they own it. They could sell this product in more countries if they want.

 

 

 

Ok - I've been through the history of the business now.. and yes,they own the brand name FeraMax, but the as far as I can see the compound used to make it is only licensed. This may seem like a minor detail as you'd expect the owner to want to extend such a successful license agreement, but I would still be wary of the tail risk relating to it being renewed at e.g. worse terms.

 

My summary take of the situation (sorry about formatting):

 

Drug portfolio is very concentrated:

 

Successes:

Feramax: Massive success (but long runway!). Shipments started in 2007.

Rough sales for first 5 years: 60k (2007), 170k (2008), 220k (2009), 680k (2010) , 2m (2011), 4m (2012), 6-7m (2013), after that it becomes unclear as Cathejell sales may or may not be kicking off.

 

Cathejell: Has been in market since 2012, presumably doing ok, but hard to tell

 

Failures (add a range of drugs aborted before launch):

INSTI (license returned 2005)

Ciprofloxacin (product recall after issues)

Virsani (license returned 2010)

 

Too early to tell:

RepaGyn

Proktis-M

Aguettant system

 

Overall it looks like a low hit ratio. Not an issue in itself, but valuing this business very much becomes a case of looking at FeraMax (great, but risks around: license agreement? / competition? / continued potential for growth?) and adding some optionality for other early stage drugs.

 

The question is if a $3.6mm TTM net earnings business @ ~$90m EV is cheap given the above..

 

Thoughts?

 

 

 

 

 

 

 

 

[snowball82]

Cathejell growth also at 107 %. Overall you can buy this stock at an annualized 0,5 PEG ratio, a very attractive price as they started to sell in new countries. Did you speak to the management so far ?

[rpadebet]

Cathejell growth also at 107 %. Overall you can buy this stock at an annualized 0,5 PEG ratio, a very attractive price as they started to sell in new countries. Did you speak to the management so far ?

 

Anyone know why the recent selloff? any new news?

thinking of adding here..

[rohitc99]

Cathejell growth also at 107 %. Overall you can buy this stock at an annualized 0,5 PEG ratio, a very attractive price as they started to sell in new countries. Did you speak to the management so far ?

 

As per my understanding, Cathejell is expected to be a 1-1.5 Mn product, repagyn 3 Mn and proktis M in the range of 1.5 Mn. So collectively they could add to the growth, but not by a substantial amount. Feramax is still the key in the medium term.

I dont have an idea on the Aguettant systems ..maybe that will add to the topline further ?

[gary17]

 

Overall it looks like a low hit ratio. Not an issue in itself, but valuing this business very much becomes a case of looking at FeraMax (great, but risks around: license agreement? / competition? / continued potential for growth?) and adding some optionality for other early stage drugs.

 

 

I believe they own the FeraMAX brand - they have agreement with a supplier for the manufacturing of the drug but as far as being able to call the drug "FeraMAX" goes, that's owned by RX.

 

 

[chmith]

 

Cathejell growth also at 107 %. Overall you can buy this stock at an annualized 0,5 PEG ratio, a very attractive price as they started to sell in new countries. Did you speak to the management so far ?

As per my understanding, Cathejell is expected to be a 1-1.5 Mn product, repagyn 3 Mn and proktis M in the range of 1.5 Mn. So collectively they could add to the growth, but not by a substantial amount. Feramax is still the key in the medium term.

I dont have an idea on the Aguettant systems ..maybe that will add to the topline further ?

 

Those are interesting numbers - no I didn't speak with management - is that where you got them?

 

C

 

[snowball82]

Press release with last Q results for me. I also encourage you to read the last covering report to have an idea about the size of the current funnel.

[gary17]

TORONTO, ONTARIO, Aug 12, 2015 (Marketwired via COMTEX) -- BioSyent Inc. ("BioSyent") (RX) released today a summary of its Second Quarter (Q2 2015) and first half financial results for the three and six months ending June 30, 2015. Key highlights include:

 

--  First six months (H1 2015) Sales of $6,900,098 increased by 25% versus

    H1 2014

--  H1 2015 Pharma sales of $6,565,300 increased by 25% versus H1 2014

--  First six months (H1 2015) Revenue has grown at a compound annual growth

    rate (CAGR) of 44% over the corresponding previous two years

--  H1 2015 EBITDA(1) of $2,490,429 increased by 31% over H1 2014

--  H1 2015 Net Income After Tax of $1,813,751 increased by 30% over H1 2014

--  H1 2015 Fully Diluted EPS of $0.13 grew by 30% over H1 2014

--  Trailing Twelve Month (TTM) fully diluted EPS of $0.25 was 39% higher

    than $0.18 in the TTM period ending June 30, 2014

--  H1 2015 Return on Equity was 40% annualized

--  In Canada, FeraMAX® 150 share of doses increased by more than 18% in

    the January - May 2015 period versus a year ago ( Source data : IMS

    Health )

--  A large international FeraMAX® order representing sales of $627,512

    received in the first quarter was postponed to Q3 2015 due to a delay in

    obtaining necessary importation clearances. Had this order been shipped

    in H1 2015, H1 2015 sales would have grown by 36% versus H1 2014. This

    order was shipped in the first week of August 2015

--  The Company remains debt-free and has an unutilized operating line of

    credit with Royal Bank of Canada of $1.55MM

 

 

An international FeraMAX® order of $627,512 received in Q1 2015, originally planned for Q2 2015 shipping, was postponed to Q3 2015 due to delay in obtaining necessary importation clearances. If this order had shipped as originally requested by the customer, H1 2015 sales would have grown by 36% versus H1 2014 and Q2 2015 pharma sales would have been +37% versus Q2 2014. This order has been shipped as of the date of this press release and will have a correspondingly positive effect on Q3 2015 results.

 

"For the first time, in June and July 2015, the Company's sales exceeded $1.5 million per month for two consective months," commented Rene Goehrum, President and CEO of BioSyent. "In Canada, in the second quarter both FeraMAX 150® and RepaGyn® had their second consective quarter of record shipments. This was backed up with strong year over year growth for Cathejell and FeraMAX Powder®. Additionally with the shipment of our largest FeraMAX® order ever to an overseas customer -- the international pharma business is on track to more than double this year."

 

[rpadebet]

So reported growth not as great as expected, primarily due to delays in the large shipment order. Most likely this would be compensated in the next quarter showing more growth than expected if management can be trusted.

 

Yesterday's sell off now makes sense.... :)

[snowball82]

After first look, few items I like :

 

37 % growth with delayed order, same great gross margins

Repeat order for Feramax from the international client;

Increased price for Feramax;

New hospital division doing well with new products;

Repagyn gaining sales traction month after month ($ 60 M market in Canada);

The investment in futur growth continue / strong balance sheet without debt.

 

Lower ROE at 40 % (!) as they now have more cash ...:)

 

[snowball82]

Cathejell growth also at 107 %. Overall you can buy this stock at an annualized 0,5 PEG ratio, a very attractive price as they started to sell in new countries. Did you speak to the management so far ?

 

As per my understanding, Cathejell is expected to be a 1-1.5 Mn product, repagyn 3 Mn and proktis M in the range of 1.5 Mn. So collectively they could add to the growth, but not by a substantial amount. Feramax is still the key in the medium term.

I dont have an idea on the Aguettant systems ..maybe that will add to the topline further ?

 

Repagyn sales are gaining traction. Maybe you could add more sales potential on that front. Biosyent is alone there and it's a + $ 60 M market only for Canada. My 2 cents.

[KCLarkin]

Increased price for Feramax;

 

I missed this. Is this in the webcast?

[snowball82]

MD&A, good sign, it's not a competition about price... our product & marketing are better :)

[gary17]

Increased price for Feramax;

 

I missed this. Is this in the webcast?

 

See excerpt from MD&A - I really like how they are growing market shares while increasing price. 

 

Mr Buffett should love this company if he didn't have such big elephant gun lol -- price increase; no debt; organic growth; no significant dilution from equity financing

[rohitc99]

Cathejell growth also at 107 %. Overall you can buy this stock at an annualized 0,5 PEG ratio, a very attractive price as they started to sell in new countries. Did you speak to the management so far ?

 

As per my understanding, Cathejell is expected to be a 1-1.5 Mn product, repagyn 3 Mn and proktis M in the range of 1.5 Mn. So collectively they could add to the growth, but not by a substantial amount. Feramax is still the key in the medium term.

I dont have an idea on the Aguettant systems ..maybe that will add to the topline further ?

 

Repagyn sales are gaining traction. Maybe you could add more sales potential on that front. Biosyent is alone there and it's a + $ 60 M market only for Canada. My 2 cents.

 

agree ..with a 55% growth rate, this could be a bigger number.

[snowball82]

Repagyn sales up 13 % month over month from March to July a good sign at this stage.

 

http://www.biosyent.com/q2-15/#.VcuKvIqy6nM

 

[gary17]

Thanks Snowball !

 

 

Did anyone see on Slide #8  , Rene indicated the business is on track to do > $4.5M in Q3! 

 

Gary

[snowball82]

Welcome Gary17 !

 

One command from ONE international client = $ 628 k. Nice start.

[snowball82]

The new Cantor report explain well the international potential. 

 

...RX presently has four active distribution partners, and five more that are waiting regulatory approval. ...we expect this to improve exiting 2016 as all of its nine partners should have regulatory clearance to distribute product in that timeframe ...

 

So look like this $ 628 k command is for only 1 of 9 distribution partners. Is there the start of a large international commercialisation for Feramax  ?

[snowball82]

The most common misconception about this company is not to see the value added the company provide. Biosyent isn't only a distributor of licenced products. Biosyent is a commercialization platform with value added for clients with an international potential. There also a potential to diversify products over time in others sectors. Products are distributed in 8 000 drugstore in Canada. IMO

[ap1234]

Thanks for highlighting the idea snowball!

 

You mentioned that they aren't simply a distributor. Can you elaborate on what the "value add" that Biosyent provides?

 

Also, how would you compare/contrast the business model/value proposition of Biosyent vs. the old Paladin Labs model? I'd be interested to get a better understanding of the similarities/differences.

 

Thanks for sharing your insights. 

[snowball82]

Many things to say about this business model and how the company does. Let start with this and assuming you aren't a competitor:) ...  They are educating doctors, patients, pharmacists what are compounds available, how feramax solves side effect problem, options to patients... offering  continuing education credit content to pharmacists.